Knock CEO Sean Black has a lot on his mind including “the difficult decision to part ways with many of our beloved Knockstars.”
Knock, a New York City-based company that makes cash offers on behalf of prospective homebuyers, announced Tuesday that it is laying off 46% of its workforce.
Knock did not say exactly how many employees will be laid off. But a source close to the company said that Knock had approximately 250 employees prior to the pink slips workers learned of this week.
The layoffs are throughout various company divisions, Knock said.
Inman News first reported on the layoffs, which were initially referenced in a colorful and revealing 1,700-word blog post complete with photos, tables, charts, and graphs on Black’s personal website. The founder of the eight-year-old company and Trulia co-founder devotes an intro and eight sections to other subjects before a penultimate section titled, “People first.”
“While substantial, the capital we raised is much less than what we set out to raise in our IPO, requiring us to rightsize the business, including the difficult decision to part ways with many of our beloved Knockstars,” Black writes. “This is why today’s announcement weighs heavily on us and me, in particular.”
The capital raise refers to the company announcing it has secured $70 million in equity and $150 million in new debt to “power its payment platform that helps customers finance their dream homes,” according to a news release.
Knock said that the Foundry Group, a Boulder, Colorado-based venture capital firm that specializes in early-stage technology companies, led the founding round. Other participants included the investment arm of the National Association of Realtors, and Mauricio Umansky, a Beverly Hills real estate broker who is CEO of The Agency.
Black’s blog post says that in March 2021 Knock hired Goldman Sachs to take the company public through a special purpose acquisition company, or SPAC.
“We were on top of the world and our mission was being fulfilled, or so we thought,” the CEO writes, adding that Knock had identified a “reputable” SPAC to shepherd it to public company status.
But, Black said, Knock was felled by dampening Wall Street enthusiasm for investing in SPACs, a method that has brought Opendoor, Finance of America, Porch, United Wholesale Mortgage and Offerpad, among other companies, public in the last two years.
Then, “the Delta variant started raging” sending “the stock market into a tailspin.”
Black said Knock rebounded a bit in October. But Zillow’s November announcement that it was winding down iBuying, “Knocked us and the entire real estate tech sector on our collective asses.”
Yet another setback, Black writes, was the Omicron variant of COVID-19. It was in December that Knock floated a pay cut for its loan officers, before rolling back the plan. Around this time, Knock was exploring being acquired.
“It was love at first sight, but like many love stories, timing is everything,” Black wrote about the possible acquisition. “Unfortunately, no agreement could be reached in part because the would-be acquirer’s stock, and therefore buying power, had been cut nearly in half from recent highs like most other tech stocks.”
Black then writes about the death of his father. His next section, titled “World War III?”, described the Russian invasion of Ukraine as “the straw that broke the camel’s back” for investment in a possible public company.
Layoffs section aside, the CEO concludes the post hopefully, stating that the investments will propel Knock on the path to profitability.
“For the first time in decades there is a ton of momentum behind fixing the very broken home buying process and we at Knock have been and will continue to be at the forefront of that revolution,” Black concluded. “We are just getting started. Onward and upward!”